Since then the insurance industry has gone through many sea changes .The competition LIC started facing from these companies were threatening to the existence of LIC. Since the liberalization of the industry the insurance industry has never looked back and today stand as the one of the most competitive and exploring industry in India. The entry of the private players and the increased use of the new distribution are in the limelight today. The use of new distribution techniques and the IT tools has increased the scope of the industry in the longer run.
Indian Insurance IndustryThe insurance business in India can be broadly sub-divided into two categories:Life InsuranceGeneral or Non-Life InsuranceLife InsuranceLife insurance in its present form came to India with the establishment of a British firm, Oriental Life Insurance Company, in 1823. The first Indian-owned life insurance Company, the Bombay Mutual Life Assurance Society, was set up in 1871. It was the first to charge the same premiums from both Indians and non-Indians. The Indian Life Assurance Companies Act, 1912, was the first statutory measure to regulate the life insurance business in India. In 1938, the earlier legislation was consolidated and amended by the Insurance Act, 1938, with comprehensive provisions for detailed and effective control over insurance. The Insurance Act was amended in 1950, making significant changes, such as requirement of equity capital for companies, ceilings on shareholdings in such companies, and stricter controls on investments of life insurance companies.
India, at the time of its Independence in 1947, had an entirely privatised insurance industry. By 1956, a total of 245 insurers (154 Indian insurers, 16 foreign insurers and 75 provident fund societies) were carrying on the life insurance business in India, primarily catering for the cities and the better-off segments of society. A plethora of insufficiently regulated players provided for an increased potential for abuse, especially because there was no separation between business houses and the insurance companies they promoted.
In January 1956, the management of life insurance business of 245 insurance players at the time was taken over by the Government of India (GoI). In September 1956, the business was nationalised and the Life Insurance Corporation of India (LIC) set up, which took over this ownership. LIC was formed in September 1956 by an Act of Parliament (LIC Act, 1956), with a capital contribution of Rs. 50 million from the GoI.
General InsuranceThe first General Insurance Company in India-Triton Insurance Company Limited-was set up in 1850 with dominant British control. Its...